Correlation Between LG Energy and MITECH CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Energy and MITECH CoLtd at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LG Energy and MITECH CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Energy Solution and MITECH CoLtd, you can compare the effects of market volatilities on LG Energy and MITECH CoLtd and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LG Energy with a short position of MITECH CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and MITECH CoLtd.
Diversification Opportunities for LG Energy and MITECH CoLtd
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 373220 and MITECH is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH CoLtd and LG Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LG Energy Solution are associated (or correlated) with MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of LG Energy i.e., LG Energy and MITECH CoLtd go up and down completely randomly.
Pair Corralation between LG Energy and MITECH CoLtd
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the MITECH CoLtd. In addition to that, LG Energy is 1.21 times more volatile than MITECH CoLtd. It trades about -0.19 of its total potential returns per unit of risk. MITECH CoLtd is currently generating about 0.21 per unit of volatility. If you would invest 739,000 in MITECH CoLtd on September 23, 2024 and sell it today you would earn a total of 76,000 from holding MITECH CoLtd or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. MITECH CoLtd
Performance |
| Timeline |
| LG Energy Solution |
| MITECH CoLtd |
LG Energy and MITECH CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and MITECH CoLtd
The main advantage of trading using opposite LG Energy and MITECH CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, MITECH CoLtd can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MITECH CoLtd will offset losses from the drop in MITECH CoLtd's long position.| LG Energy vs. Doosan Heavy Ind | LG Energy vs. Hyosung Heavy Industries | LG Energy vs. Aprogen KIC | LG Energy vs. Korea Refract |
| MITECH CoLtd vs. Samsung Electronics Co | MITECH CoLtd vs. Samsung Electronics Co | MITECH CoLtd vs. LG Energy Solution | MITECH CoLtd vs. SK Hynix |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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